The power of cloud
Upcoming SlideShare
Loading in...5
×
 

The power of cloud

on

  • 684 views

Although cloud is widely recognized as a technology ...

Although cloud is widely recognized as a technology
game changer, its potential for driving business innovation remains virtually untapped.
Indeed, cloud has the power to fundamentally shift competitive landscapes by providing a
new platform for creating and delivering business value. To take advantage of cloud’s
potential to transform internal operations, customer relationships and industry value
chains, organizations need to determine how best to employ cloud-enabled business
models that promote sustainable competitive advantage.

Statistics

Views

Total Views
684
Views on SlideShare
684
Embed Views
0

Actions

Likes
0
Downloads
11
Comments
0

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

The power of cloud The power of cloud Document Transcript

  • IBM Global Business Services Strategy and TransformationExecutive ReportIBM Institute for Business ValueThe power of cloudDriving business model innovation
  • IBM Institute for Business ValueIBM Global Business Services, through the IBM Institute for Business Value, developsfact-based strategic insights for senior executives around critical public and privatesector issues. This executive report is based on an in-depth study by the Institute’sresearch team. It is part of an ongoing commitment by IBM Global Business Servicesto provide analysis and viewpoints that help companies realize business value.You may contact the authors or send an e-mail to iibv@us.ibm.com for more information.Additional studies from the IBM Institute for Business Value can be found atibm.com/iibv
  • IntroductionBy Saul Berman, Lynn Kesterson-Townes, Anthony Marshall and Rohini SrivathsaAlthough cloud is widely recognized as a technologygame changer, its potential for driving business innovation remains virtually untapped.Indeed, cloud has the power to fundamentally shift competitive landscapes by providing anew platform for creating and delivering business value. To take advantage of cloud’spotential to transform internal operations, customer relationships and industry valuechains, organizations need to determine how best to employ cloud-enabled businessmodels that promote sustainable competitive advantage.Cloud has already changed both business and everyday life – Through our research, we also identified some game-changingfrom consumers who perhaps unknowingly use it to access business enablers powered by cloud. Organizations aretheir favorite music to companies that purposely harness its exploiting these business enablers to drive innovation thatpowerful resources. While much activity and buzz relating to extends well beyond IT and into the boardroom. Our analysiscloud involves its technological capabilities, the benefits of reveals that some organizations are harnessing cloud tocloud adoption actually extend into the business realm. transform both product and service development and recast customer relationships.When utilized effectively, cloud capabilities offer numerousopportunities to drive business innovation. Recent technology We observed three business archetypes, representing the extentand social connectivity trends have created a perfect storm of to which organizations use cloud to impact company andopportunity for companies to embrace the power of cloud to industry value chains, and customer value propositions:optimize, innovate and disrupt business models. • Optimizers use cloud to incrementally enhance theirTo more clearly determine how organizations use cloud today customer value propositions while improving theirand how they plan to employ its power in the future, we organization’s efficiency.surveyed, in conjunction with the Economist Intelligence Unit, • Innovators significantly improve customer value through572 business and technology executives across the globe. Our cloud adoption, resulting in new revenue streams or evenresearch suggests that while cloud is widely recognized as an changing their role within an existing industry ecosystem.important technology, relatively few organizations today • Disruptors rely on cloud to create radically different valueactively embrace it to drive business model innovation. propositions, as well as generate new customer needs andHowever, our survey also indicates this will change dramati- segments – and even new industry value chains.cally in the next few years, with more and more organizationslooking to cloud to drive new business and transform indus-tries.
  • 2 The power of cloudWhether companies choose to become optimizers, innovators Cloud’s bright futureor disruptors depends on a variety of factors, including how Through our survey of business and technology leaders, wemuch risk they are willing to assume and their current compet- discovered that organizations – both big and small, acrossitive landscape. We suggest business leaders carefully assess geographies and in virtually every industry – are embracingtheir organizations to determine which archetype they most cloud as a way to reduce the complexity and costs associatedclosely match – as well as which one they aspire to in the future with traditional IT approaches. Almost three-fourths of the– and how they can leverage cloud to create new business leaders in our survey indicated their companies had piloted,models that promote long-term growth and profit. adopted or substantially implemented cloud in their organiza- tions – and 90 percent expect to have done so in three years (see Figure 1). And the number of respondents whose companies have substantially implemented cloud is expected toWhat is cloud? grow from 13 percent today to 41 percent in three years.Cloud computing is a pay-per-use consumption anddelivery model that enables real-time delivery ofconfigurable computing resources (for example, What is your organization’s level of cloud adoption?networks, servers, storage, applications, services). Percent of respondentsTypically, these are highly scalable resources delivered 90%over the Internet to multiple companies, which pay onlyfor what they use. 72% 21% PilotingCloud delivery models can help organizations scale theirinvestments as they grow their business. They can also 28% Adoptingopen the door to new business approaches through 38%standardized applications, infrastructure, testing +33%environments and business processes that help improveservice delivery and efficiency. Substantially 21% 41% implementedFor additional details about both business and technical +215%aspects of cloud computing, please see ibm.com/cloud. 13% Today Three years Source: 2011 IBM Institute for Business Value/Economist Intelligence Unit Cloud-Enabled Business Model Survey. Figure 1: A large majority of survey participants have implemented cloud at some level – and adoption is expected to accelerate in coming years.
  • IBM Global Business Services 3In IT circles, it appears cloud has almost become mainstream. Organizations are not only relying on cloud to enhanceNearly half of the respondents in a recent CIO Economic internal efficiencies, but also to target more strategic businessImpact survey indicated they evaluate cloud options first – capabilities. In fact, our respondents’ number-one objective forover traditional IT approaches – before making any new IT adopting cloud is an external capability – that of increasedinvestments.1 And this cloud adoption phenomenon is not collaboration with external partners (see Figure 2). Only one oflimited to large companies. Our survey revealed that while a the top seven objectives cited focused on internal efficiencies,higher percentage of large organizations (those with revenues with 57 percent looking to cloud to drive competitive and costmore than US$20 billion) are experimenting with cloud, small advantages through vertical integration. The rest, such as neworganizations are by no means left out of the game. In fact, 67 channels, delivery markets and revenue streams, all relate topercent of companies with revenues less than US$1 billion and improved business capabilities.76 percent of those with revenues between US$1 and 20billion have adopted cloud at some level. It’s not surprisingthen that the global cloud computing market is forecast togrow 22 percent annually to US$241 billion by 2020.2 How important are the following objectives for adopting cloud? Percent of respondents Increased collaboration with external partners 35% 27% 62% Competitive/cost advantages through vertical integration 28% 29% 57%* New delivery channels/markets 30% 26% 56% New/enhanced revenue streams 25% 29% 54% Competitive differentiation through specialization 29% 22% 51% Rebalanced mix of products/services 31% 15% 46% Flexible pricing models 26% 17% 43% Important Very important * Internal efficiencies, all others Business capabilitiesSource: 2011 IBM Institute for Business Value/Economist Intelligence Unit Cloud-Enabled Business Model Survey.Figure 2: Organizations clearly intend for cloud to improve their business capabilities, in addition to enhancing internalefficiencies.
  • 4 The power of cloudInterestingly, while our research clearly reveals organizations But how does cloud play into all of this? Cloud provides a wayintend to rely on cloud to enhance their business capabilities, for businesses to exploit the capabilities borne of these digitalonly 38 percent cite cloud as a leading priority for the entire trends to better meet customers’ needs and drive futurecompany. Rather, cloud is still viewed by many as an IT growth. In fact, our research illuminates six key cloud attri-solution, with 62 percent citing cloud as a leading priority for butes being used to power business model innovation, whichtheir IT organizations. we’ve dubbed business enablers: Cost flexibility, business scalability, market adaptability, masked complexity, context-Our survey results suggest that organizations are just driven variability and ecosystem connectivity (see Figure 3).beginning to understand the power of cloud to help drivebusiness innovation. Only 16 percent of survey respondentscurrently utilize cloud for sweeping innovation, such as Cloud’s business enablersentering new lines of business or industries, reshaping an 2 Business scalabilityexisting industry or transitioning into a new role in their • Provides flexibleindustry value chain. However, 35 percent plan to rely on cost-effective computing Cost flexibility capacity to supportcloud for business model innovation within the next three 1 growth • Shifts fixed toyears. variable cost • Allows “pay as and 3 Market adaptability when needed” model • Enables faster timeClearly, cloud is widely recognized as an important technology, to market • Supportsoffering capabilities that positively affect IT. However, its full 6 Ecosystem connectivity experimentation • Fosters new value netsbusiness potential has yet to be realized or even understood by • Drives potential new 4 Masked complexitymost organizations. businesses • Enables expanded product sophisticationTapping the power of cloud 5 Context-driven variability • Allows for more end user simplicityThe world is experiencing a digital and mobile transforma- • Enables user-defined experiencestion, with more information available more quickly in more • Increases productmediums than ever before. As part of this, consumers have relevancejumped on the social media bandwagon, with many relying on Source: IBM Institute for Business Value analysis, 2012.it as their primary collaboration format. Add to this theadvent of new analytics capabilities and the results are Figure 3: Cloud empowers six potentially “game-changing” business enablers.sweeping changes in almost every aspect of daily business andconsumer life.
  • IBM Global Business Services 51. Cost flexibility 2. Business scalabilityCost flexibility is a key reason many companies consider cloud IT scalability is recognized by many as a major benefit ofadoption in the first place. More than 31 percent of executives cloud adoption. However, cloud offers more than just ITsurveyed cited cloud’s ability to reduce fixed IT costs and shift scalability – it allows an organization to easily scale itsto a more variable “pay as you go” cost structure as a top business operations as well.benefit. By allowing for rapid provisioning of resources without scaleCloud can help an organization reduce fixed IT costs by limitations, cloud enables a company to benefit fromenabling a shift from capital expenses to operational expenses. economies of scale without achieving large volumes on itsIT capital expenses – which typically include enterprise own. Recognizing cloud’s ability to facilitate efficient growthsoftware licenses, servers and networking equipment – tend to and expanded options, approximately a third in our surveybe less fluid, more expensive and harder to forecast than view business scalability as a top cloud benefit.routine IT operating expenses. With cloud applications, thereis no longer a need to build hardware, install software or pay For this concept in action, consider Netflix, an Internetdedicated software license fees. By adopting cloud services, an subscription service for movies and TV shows. Because itorganization can shift costs from capital to operational – or streams many movies and shows on demand, the companyfrom fixed to variable. The organization pays for what it needs faces large surges of capacity at peak times. As Netflix beganwhen it needs it. This pay-per-use model provides greater to outgrow its data center capabilities, the company made aflexibility and eliminates the need for significant capital decision to migrate its Web site and streaming service from aexpenditures. traditional data center implementation to a cloud environ- ment. This move allowed the company to grow and expand itsCost flexibility is certainly an appealing cloud attribute for customer base without having to build and support a dataEtsy, an online marketplace for handmade goods. In addition to center footprint to meet its growth requirements.4bringing buyers and sellers together, Etsy also providesrecommendations for buyers. Using cloud-based capabilities, 3. Market adaptabilitythe company is able to cost-effectively analyze data from the In today’s economic environment, the ability to respond toapproximately one billion monthly views of its Web site and rapidly changing customer needs is a key competitive differ-use the information to create product recommendations. The entiator. As such, companies continuously seek ways tocost flexibility afforded through cloud provides Etsy access to improve their agility to adjust to market demands. A third oftools and computing power that might typically only be the executives we surveyed believe cloud can assist in thisaffordable for larger retailers.3 respect, citing market adaptability among cloud’s top benefits. By enabling businesses to rapidly adjust processes, products and services to meet the changing needs of the market, cloud in turn facilitates rapid prototyping and innovation and helps speed time to market. More than 31 percent of executives surveyedcited cloud’s ability to reduce fixed IT costs andshift to a more variable “pay as you go” coststructure as a top benefit.
  • 6 The power of cloudActiveVideo certainly recognized cloud’s power to enhance Masked complexity is perhaps less recognized than some of themarket adaptability when it created CloudTV, a cloud-based other enablers, as 20 percent of the business leaders in ourplatform that unifies all forms of content – Web, television, survey cited it as a top benefit. Xerox definitely recognizes thismobile, social, video-on-demand, etc. – onto any video screen. cloud attribute, however, as evidenced by its Xerox Cloud PrintContent and applications from Web content creators, televi- solution. With Xerox Cloud Print, workers can get theirsion networks, advertisers and other media entities can be desired content in printed form wherever they might be bydeveloped quickly for CloudTV using standard Web tools. using Xerox’s cloud to access printers outside their ownCloudTV leverages content stored and processed in the organization.6 While printing from the cloud requires quite anetwork cloud to significantly expand the reach and availability bit of data management – with numerous files to be stored,of Web-based user experiences, as well as to allow operators to converted to print-ready format and distributed to printers –quickly deploy a consistent user interface across diverse set top the complexity is hidden from users.boxes and connected devices. The CloudTV approach ofplacing the intelligence in the network, rather than the device, 5. Context-driven variabilityenables content creators, service providers and consumer Because of its expanded computing power and capacity, cloudelectronics manufacturers to create new television experiences can store information about user preferences, which can enablefor their viewers.5 product or service customization. The context-driven vari- ability provided via cloud allows businesses to offer users4. Masked complexity personal experiences that adapt to subtle changes in user-In addition to business scalability and market adaptability, defined context, allowing for a more user-centric experience.cloud also offers the advantage of masking complexity. Cloud This is a significant cloud attribute, as evidenced by the moreprovides a way for organizations to “hide” some of the intrica- than 50 percent of respondents who cited “addressing frag-cies of their operations from end users, which can help attract a mented user preferences” as important for their organizations.broader range of consumers. Because complexity is veiled fromthe end user, a company can expand its product and service Siri, the Apple iPhone 4S cloud-based natural languagesophistication without also increasing the level of user “intelligent assistant,” is all about context-driven variability. Itknowledge necessary to utilize or maintain the product or allows users to send messages, schedule meetings, place phoneservice. For example, upgrades and maintenance can be done in calls, find restaurants and more.7 And while other phones havethe “background” without the end user having to participate. some voice recognition features, Siri “learns your voice” as Wall Street Journal columnist Walt Mossberg put it.8 Siri uses artificial intelligence and a growing base of knowledge about the user, including his or her location and frequent contacts, to understand not only what is said but what is meant. In a nutshell, it leverages the computing capabilities and capacity ofTwenty percent of the business leaders in our cloud to enable individualized, context-relevant customer expe-survey cited “masked complexity” as a top riences.9benefit of cloud.
  • IBM Global Business Services 76. Ecosystem connectivityAnother business enabler powered by cloud is ecosystem Createconnectivity, which is recognized by a third of our respondentsas a major benefit. Cloud facilitates external collaboration with Value chainpartners and customers, which can lead to improvements in Transformproductivity and increased innovation. Cloud-based platformscan bring together disparate groups of people who cancollaborate and share resources, information and processes.HealthHiway is a great example of how cloud can enable Improve Customer value propositionecosystem connectivity. A cloud-based health informationnetwork, HealthHiway enables the exchange of information Enhance Extend Inventand transactions among healthcare providers, employers,payers, practitioners, third-party administrators and patients in Source: IBM Institute for Business Value analysis. 2012.India. By connecting more than 1,100 hospitals and 10,000 Figure 4: Cloud business enablers help spur innovation acrossdoctors, the company’s software-as-a-service solution facilitates customer value propositions and across company and industrybetter collaboration and information sharing, helping deliver value chains.improved care at a low cost, particularly important in growingmarkets, such as India.10 Customer value propositions Enhance: Organizations can use cloud to improve currentCloud-enabled business innovation • products and services and enhance customers’ experiences toCloud business enablers are already driving innovation across retain current and attract new customers, garneringcustomer value propositions and company and industry value incremental revenue.chains. Enterprises are applying cloud to generate additional • Extend: Cloud can help a company create new products andrevenue streams by enhancing, extending and inventing new services or utilize new channels or payment methods to attractcustomer value propositions. And cloud is being used to existing or adjacent customer segments in an attempt toimprove, transform and create new organization and industry generate significant new revenues.value chains (see Figure 4). This has resulted in shifts in who • Invent: Companies can use cloud to create a new “need” andcreates value, as well as how it is created, delivered and own a new market, attracting new customer segments andcaptured. generating entirely new revenue streams.
  • 8 The power of cloudValue chains Cloud Enablement Framework• Improve: Cloud adoption can help an organization maintain its place in an existing value chain through increased efficiency and an improved ability to partner, source and collaborate. Create Disruptors• Transform: By assisting in developing new operating capabilities, cloud can help a company change its role within its industry or enter a different industry. Innovators Transform Create: Organizations can use cloud to build a new industry Value chain• value chain or disintermediate an existing one, radically changing industry economics.Cloud Enablement Framework OptimizersUsing the extent to which an organization’s use of cloud can Improveaffect value propositions and value chains as dimensions, wecreated a “Cloud Enablement Framework,” which identifies Enhance Extend Inventthree organizational archetypes: Optimizers, innovators and Customer value propositiondisruptors (see Figure 5). These archetypes characterize theimpact of an organization’s cloud-enabled business strategy.They are based on the extent to which an organization Source: IBM Institute for Business Value analysis, 2012.enhances, extends or invents customer value propositions – and Figure 5: The Cloud Enablement Framework helps organizationsimproves, transforms or creates new value chains. classify the extent to which their use of cloud impacts value propositions and value chains.The framework is not a maturity model. We don’t expect orrecommend that organizations first start as optimizers and thenbecome innovators and disruptors. Instead, an organizationshould determine its place in the Cloud Enablement OptimizersFramework based on the company’s strategy, risk profile, Optimizers use cloud to incrementally enhance their customercompetitive landscape, etc. value propositions while improving organizational efficiency (see sidebar, Optimizer case study: North Carolina State University). Optimizers stand to deepen their customer relationships without risking the potential failure inherent inThe “Cloud Enablement Framework” radical new business models. While optimizers can expand the value they offer through improved products and services,identifies three organizational archetypes – enhanced customer experiences and broader channel deliveryoptimizers, innovators and disruptors – that options, they tend to realize lower revenue and market sharecharacterize the impact of an organization’s gains than innovators and disruptors.cloud-enabled business strategy.
  • IBM Global Business Services 9Optimizer case study: North Carolina State University11Based in Raleigh, North Carolina State University is a VCL solution allows users to remotely access a desired setcomprehensive university known for its leadership in of applications and environments over the Internet – using aeducation and research and globally recognized for its personal computer, laptop or mobile device – from anywherescience, technology, engineering and mathematics at any time. The solution’s flexible and intelligent resourceleadership. provisioning offers significant improvements in access, efficiency and convenience over the previous approach,Challenge allowing NC State to optimize operational efficiencies andWith more than 31,000 students and nearly 8,000 faculty and enhance the user experience. In fact, the university has nowstaff, NCSU faced growing demand for academic computing provided access to the VCL to students throughout Northresources, making it challenging to deliver the service level Carolina, including those in elementary, high school, andthat its key user populations – students, instructors, other colleges and universities.researchers and administrators – require. The university notonly wanted to fundamentally change the way it managed Business resultscomputing resources, it also wanted to enhance the user Moving to a cloud-based infrastructure provided Northexperience, position itself for continued growth and Carolina State University with:effectively control costs. • Increased flexibility to shift computing capacity betweenCloud-enabled business model instructional, research and administrative needsIn collaboration with IBM, NC State created its Virtual • The ability to scale up to match significant growth inComputing Lab (VCL), a cloud-based technology that university enrollmentprovides students, faculty and researchers access to the • A chance to share its resources with students throughoutmost advanced educational materials, select software the state, improving the education opportunities and livesapplications, and computing and storage resources. The of many.
  • 10 The power of cloud InnovatorsInnovators utilize cloud to significantly extend customer value By extending and transforming, innovators have the opportu-propositions, resulting in new revenue streams. In doing so, nity to combine previously unrelated elements of the valuethey transform their role within their industry or enter an chain and value proposition to gain competitive advantage.adjacent market or industry space (see sidebar, Innovator casestudy: 3M Visual Attention Service).Innovator case study: 3M Visual Attention Service12The 3M Visual Attention Service is an online scanning tool Cloud-enabled business modelthat scientifically analyzes design effectiveness based on 3M’s cloud-enabled business model allows it to offer a newhow the average human eye responds. VAS marries vision solution, known as VAS, to a new audience – the creativescience with technology to help designers, marketers and design community. The cloud-based offering allows 3M toother communicators test the visual impact of their content transform its role in the product development value chain byand increase the probability that viewers will notice the most closely integrating with a global network of designers. Theimportant elements of a design. affordable, flexible, cloud-based, pay-as-you-go model allows the company to deliver VAS in a fast, user-friendlyChallenge manner that fits into a designer’s existing design process.Since the global design community is made up of copioussmall design organizations, 3M needed to make the new Business resultscapability accessible from anywhere, affordable to many and By hosting VAS via cloud, 3M achieved:available as needed during a design project. By delivering • A highly scalable environment – important during peakVAS using cloud technology, 3M is able to offer the service design timeson a continuous basis without requiring customers to install • A low up-front investment and a flexible pay-as-you-gospecial software to use it. Hosting the solution via cloud also pricing model to help significantly reduce hosting costshelps the company ensure the latest version is always and optimize profitsavailable for customers. • The ability to attract new customers with an innovative solution while facilitating tighter integration within the product design ecosystem.
  • IBM Global Business Services 11 DisruptorsDisruptors invent radically different value propositions, disruptors can gain “first-mover” advantage. Ourgenerating new customer needs. They capture unique competi- survey indicates a larger percentage of disruptorstive advantage by creating a new or disrupting an existing expect to outperform their peers in the next threeindustry or market (see sidebar, Disruptor case study: Comcast years than do innovators or optimizers. While theyXcalibur). Disruptors often provide customers what they face greater risks, disruptors tend to anticipateweren’t even aware they wanted or needed! By taking a risk, higher rewards.Disruptor case study: Comcast Xcalibur13Comcast Corporation is a leading media, entertainment and devices. Customers can find content tailored to their needscommunications company. It operates cable systems and in new ways, for example, by using an iPad app to choosedevelops, produces and distributes entertainment, news, channels, on demand videos and Xfinity online streamingsports and other content for global audiences. It is also one videos. They can then watch their selected content whenof the nation’s largest video, high-speed Internet and phone and where they want – whether on TV, tablet or other device.providers to residential and business customers. This personalized TV experience, combined with a powerful search engine and Internet apps to access non-TV content,Challenge as well as the ability to share via social media channels,In 2011, Comcast piloted Xcalibur, its next generation cloud- allows Xcalibur to create a radically different customer valuebased TV platform that aims to revolutionize the way people proposition, with the potential of attracting entirely newwatch TV. Xcalibur moves the company beyond the delivery customer segments in the future.of channels and video via set top boxes that use digitaltelevision technology to leveraging cloud architecture that Business resultsdelivers live TV service to any Internet-connected device. The Wall Street Journal cited this move to the cloud asLeveraging Internet Protocol (IP) technology, the company evidence of “a new phase in how Internet technologies arecan update its guide and add features more easily and transforming television.” Benefits thus far to Comcastcheaply. It also helps Comcast meet the demands of include:“connected customers” to watch TV wherever they want and • Meeting customer demands for easier access to TV andaccess content sources more seamlessly. other Internet-enabled contentCloud-enabled business model • Delivering content to more devices than beforeThe cloud-based platform shifts the ability to control content • Creating new apps faster and more cheaplyinto the cloud. It enables live video feeds that serve the ever- • Making UI changes more quickly and easily.growing numbers and types of mobile and connected
  • 12 The power of cloudTo optimize, innovate or disrupt? 2. Look within and beyond your organization’s borders toWe recommend organizations carefully evaluate the various maximize the value derived from cloud adoption.opportunities available to harness the power of cloud as an • Determine how your cloud strategy can impact youroptimizer, innovator or disruptor – and find the right opportu- industry ecosystem, and identify new partners that cloudnity for their particular circumstances or product/service line. can help draw into your ecosystem. In addition, evaluateTo assist them in this regard, we recommend three key actions whether cloud can or should change your role in theto help reap the potential rewards associated with cloud- ecosystem.enabled business models: • Use cloud to respond to your industry’s end customers more effectively. Explore whether cloud can help enhance1. Establish shared responsibility for cloud strategy and your value proposition with your current customers, and governance across the business and IT to help ensure cloud examine whether you can reach other customer segments remains a top business priority. by leveraging cloud. Place a senior executive business leader, in partnership with • the CIO, in charge of your firm’s cloud business strategy 3. Identify whether your organization seeks to be an optimizer, development. This collaboration should help clearly innovator or disruptor and use cloud to innovate your formulate an optimal cloud strategy and link it with your business model to realize that potential. business and marketing strategies. In the adoption phase, • Consider organizational and market factors – corporate these leaders will communicate and drive cloud as a top strategy, competitive dynamics, customer strategy, your business priority, as well as ensure that infrastructure and firm’s risk profile, how empowered your customers are, etc. operational efficiencies are optimized and business – that impact your cloud strategy. objectives are met. • Determine where – if at all – your organization is Establish a governing committee of business and IT leaders • positioned in the Cloud Enablement Framework today. to oversee cloud adoption and implementation. Determine • Determine where your organization should be in the next which cloud business enablers should be leveraged and how three to five years – should it be an optimizer, innovator or they will be used. Develop and oversee the implementation disruptor? In considering this, remember that the of business changes (e.g., processes, outcomes) that cloud framework is not a maturity model – a company does not will enable within your organization and throughout your have to first become an optimizer before becoming an industry ecosystem. innovator or disruptor. Rather, each company has to evaluate the opportunities and risks inherent within each archetype and determine “who” they want to be and what works best for the company, industry and customer set. Organizations can pursue the business benefits • Build business and technology skills and capabilities to close of cloud by: establishing shared responsibility the gap between your current and future cloud position or to maintain your current position if that is the goal. for cloud strategy and governance; looking internally and externally for ways to maximize the value of cloud adoption; and determining whether to be an optimizer, innovator or disruptor.
  • IBM Global Business Services 13 • Determine whether your cloud strategy should involve Conclusion becoming a cloud service consumer or a provider of Although cloud has practically become mainstream in the IT cloud-based offerings – or include elements of both. world, its promise extends well beyond technological innova- Typically, cloud service consumers use cloud to enhance tion. In fact, cloud has the power to open doors to more their business models and drive increased value for their efficient, responsive and innovative ways of doing business. customers or business. Cloud service providers, on the other hand, offer services via the cloud to enhance the business Companies worldwide are beginning to recognize cloud’s model of other organizations or their own. Cloud service capabilities to generate new business models and promote providers might use cloud to engage in innovation within sustainable competitive advantage. As more and more their own value chain or facilitate innovation within other companies join the bandwagon, we believe those that come out value chains. on top will be the same ones that carefully harness the power of cloud for their organization. Whether they choose toNavigating your course in the cloud become optimizers, innovators or disruptors, successfulAs business leaders reflect on how their organizations can best organizations will leverage cloud as a key point of differentia-realize the full potential of cloud to optimize, innovate or tion in driving business value and success.disrupt business models, they need to challenge existingapproaches and realities. We suggest they imagine the possi- To learn more about this IBM Institute for Business Valuebilities associated with cloud-enabled business models by study, please contact us at iibv@us.ibm.com. For a full catalogconsidering some questions: of our research, visit: ibm.com/iibv• What if your organization had access to unlimited computing resources to scale your business? Be among the first to receive the latest insights from the IBM• What if you had access to previously unaddressed customers Institute for Business Value. Subscribe to IdeaWatch, our or markets and could target them based on their monthly e-newsletter featuring executive reports that offer individualized preferences through analytical insights? strategic insights and recommendations based on IBV research:• What if you could give customers access to your products and services anytime, anywhere and on any device? ibm.com/gbs/ideawatch/subscribe• What if you could inexpensively and rapidly develop and launch new product and service offerings?• What if you could easily and seamlessly connect and collaborate with business partners and customers?• What if you could redefine your role in your industry and change your competitive positioning?
  • 14 The power of cloudAbout the authors Dr. Rohini Srivathsa is a Strategy & Transformation Center ofDr. Saul J. Berman is the Global Lead Partner for Strategy Competence (CoC) Leader and an Associate Partner withinConsulting and Innovation and Growth for IBM Global IBM Global Business Services. Rohini has more than 18 yearsBusiness Services. He has over 25 years of experience of experience in management consulting, sales and marketing,consulting with senior management and has published multiple entrepreneurship, and research and development. She hasarticles and in-depth reports on strategy and the future of published extensively and is a frequent speaker on topicsmedia and entertainment, as well as his book, Not for Free: related to strategy, innovation and technology. Rohini can beRevenue Strategies for a New World. Saul is a frequent keynote reached at rohini.srivathsa@in.ibm.com.speaker at major industry conferences and was named one ofthe 25 most influential consultants of 2005 by Consulting IBM contributorsmagazine. He can be reached at saul.berman@us.ibm.com. Sachin Agrawal, Senior Managing Consultant, Strategy & Transformation Global CoCLynn Kesterson-Townes is the Global Communications SectorLeader for the IBM Institute for Business Value and an Denise Arnette, Cloud Global Business Advisor, GlobalAssociate Partner within IBM Global Business Services. Lynn Business Serviceshas more than 20 years of hands-on management and advisory Stephen Ballou, Director, IBM Institute for Business Valueexpertise in management consulting, strategic planning, Research Hubbusiness development, and mergers and acquisitions. She has Thomas Guinan, Associate Partner, Strategy & Transformationled IBM’s market insights initiatives relating to cloud Global CoCcomputing since their inception. Lynn can be reached at LKT@us.ibm.com. Rachna Handa, Business Transformation Consultant, Global Business ServicesAnthony Marshall is a Strategy Lead for the IBM Institute forBusiness Value and Program Director of the Global CEO David R. Hughes, Director of Marketing, Global BusinessStudy. He has 20 years of international business and strategy Servicesexperience, working with numerous top-tier U.S. and global Eric Lesser, Research Director and North American Leader,organizations. Anthony has worked extensively in the areas of IBM Institute for Business Valueinnovation management, business commercialization, anddigital strategy and transformation. He also has a background Anthony J. Lipp, Global Strategy Leader, Finance Sector, Salesin privatization and regulation economics. He can be reached & Distributionat anthony2@us.ibm.com. Kathleen Martin, Project Manager/Senior Analyst, IBM Institute for Business Value Research Hub Robert Murray, Consultant, Strategy & Transformation Global CoC Matthew R. Porta, Vice President and Partner, Global Tech- nology Strategy David Wong, Cloud Computing Marketing
  • IBM Global Business Services 15The right partner for a changing world ReferencesAt IBM, we collaborate with our clients, bringing together 1 Brousell, Lauren. “Survey: CIOs are putting the cloudbusiness insight, advanced research and technology to give first.” CIO.com. June 14, 2011. http://www.cio.com/them a distinct advantage in today’s rapidly changing environ- article/684338/Survey_CIOs_Are_Putting_the_Cloud_ment. Through our integrated approach to business design and Firstexecution, we help turn strategies into action. And withexpertise in 17 industries and global capabilities that span 170 2 Ried, Stefan and Holger Kisker. “Sizing the Cloud,countries, we can help clients anticipate change and profit from Understanding And Quantifying The Future Of Cloudnew opportunities. Computing.” Forrester Research, Inc. April 21, 2011. 3 Vance, Ashlee. “The Cloud: Battle of the Tech Titans.” Bloomberg Businessweek. March 3, 2011. http://www. businessweek.com/magazine/content/11_11/ b4219052599182_page_4.htm 4 “Netflix’s move to AWS.” Silicon Valley Cloud Computing Group. October 14, 2010. http://www.meetup.com/ cloudcomputing/events/14476942/; Webb, Jenn. “How the cloud helps Netflix.” O’Reilly Radar. http://radar.oreilly. com/2011/05/netflix-cloud.html 5 “Funai Electric Becomes First Consumer Electronics Manufacturer to Launch Cloud-Based Interactive Televi- sion Solution.” ActiveVideo Networks press release. January 4, 2011. http://www.activevideo.com/pr_story. php?id=12; “ActiveVideo Networks to Demo with NAGRA and SmarDTV at IBC; Shows Ability of CloudTV to Support HTML5 Ecosystem.” PRNewswire. September 7, 2011. http://www.prnewswire.com/news-releases/activev- ideo-networks-to-demo-with-nagra-and-smardtv-at-ibc- shows-ability-of-cloudtv-to-support-html5-ecosystem -129358308.html 6 “About Cloud Print.” Xerox Cloud Print Introduction Web site (accessed November 29, 2011). http://cloudprint. cloudapp.net/developer/Summary
  • 16 The power of cloud7 “Siri. Its wish is your command.” iPhone. Apple Web site 12 Case study based on information obtained through the (accessed November 15, 2011). http://cloudprint.cloudapp. following sources: “3M Visual Attention Service.” 3M Web net/developer/Summary http://www.apple.com/iphone/ site (accessed December 1, 2011). http://solutions.3m.com/ features/siri.html wps/portal/3M/en_US/VisualAttentionService/; Alexander, Steve. “Customers now clearer on cloud computing.” Star8 Mossberg, Walt. “The iPhone finds its voice.” Personal Tribune. March 10, 2010. http://www.startribune.com/ Technology column. The Wall Street Journal. October 12, business/93351379.html 2011. http://online.wsj.com/article/SB10001424052970203 633104576625072852930788.html 13 Comcast Corporation. “Corporate Information.” http:// www.comcast.com/corporate/about/corporateinfo/9 Daw, David. “What makes Siri special?” PCWorld. October corporateinfo.html?SCRedirect=true; Lawler, Ryan. “Did 24, 2011. http://www.pcworld.com/article/242479/what_ the cloud just kill the set-top box?” Gigaom. June 16, 2011. makes_siri_special.html http://gigaom.com/video/cloud-set-top-box/; Lawler, Ryan. “Comcast Taking Video Delivery Into the Cloud.”10 “Who we are.” HealthHiway Web site (accessed December Gigaom. May 25, 2011. “http://gigaom.com/video/ 7, 2011). http://www.healthhiway.com/about_us.html; comcast-xcalibur-cloud/; Vascellaro, Jessica E. “Comcast “Building Healthcare Communities, Connecting Lives.” Tests Tech Overhaul.” Wall Street Journal. May 26, 2011. HealthHiway corporate brochure. http://www.healthhiway. http://online.wsj.com/article/SB100014240527023040665 com/Corporate_Brochure.pdf 04576345330554958642.html; “Comcast’s CEO Discusses11 Case study based on information obtained through the Q3 2011 Results – Earnings Call Transcript.” Seeking following sources: “Discovery begins at NC State.” North Alpha. November 2, 2011. http://seekingalpha.com/ Carolina State University Web site (accessed December 7, article/304472-comcast-s-ceo-discusses-q3-2011-results- 2011). http://www.ncsu.edu/about-nc-state/index.php; earnings-call-transcript?find=apps&all=false; blog.comcast. “North Carolina State University and IBM Extend Access com/2011/05/looking-to-the-cloud-to-build-a-better-tv- to Educational Resources to the World through Cloud experience.html Computing.” CSC News. NC State University Computer Science. October 24, 2008. http://www.csc.ncsu.edu/ news/764; “North Carolina State University Cloud Computing Services.” ED.gov. U.S. Department of Education. http://www.ed.gov/technology/netp-2010/ ncsu-cloud-computing
  • © Copyright IBM Corporation 2012IBM Global ServicesRoute 100Somers, NY 10589U.S.A.Produced in the United States of AmericaFebruary 2012All Rights ReservedIBM, the IBM logo and ibm.com are trademarks or registered trademarksof International Business Machines Corporation in the United States, othercountries, or both. If these and other IBM trademarked terms are markedon their first occurrence in this information with a trademark symbol (® or™), these symbols indicate U.S. registered or common law trademarksowned by IBM at the time this information was published. Such trademarksmay also be registered or common law trademarks in other countries. Acurrent list of IBM trademarks is available on the Web at “Copyright andtrademark information” at ibm.com/legal/copytrade.shtmlOther company, product and service names may be trademarks or servicemarks of others.References in this publication to IBM products and services do notimply that IBM intends to make them available in all countries in whichIBM operates. Please Recycle GBE03470-USEN-01